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Computer chip shortage may leave auto sector idling

By - Apr 25,2021 - Last updated at Apr 25,2021

PARIS — What was initially downplayed as a brief hiccup in the supply of semiconductors looks more and more like a shortage that may last throughout the year in what would be a big blow to automakers.

They were planning to rev up production this year to meet an expected surge in demand from consumers as the pandemic wanes and to recover from last year's losses. But without enough chips those hopes are fading.

 

Stop and go manufacturing 

 

The shortage of chips has pushed automakers to idle production lines for brief periods when they temporarily run out of supplies. 

Toyota, Volkswagen, Ford, Peugeot, Fiat, Jeep, Honda, Jaguar Land Rover and even the Chinese startup Nio have had to pause production in their factories in the past months.

Automakers have reduced the stocks of parts they keep on hand in recent years as part of cost-cutting measures, so delivery delays can quickly force an entire shutdown. 

Renault CEO Luca de Meo told shareholders this past week that "the semiconductor shortage could cause a drop in production volume this year of at least 100,000 vehicles".

In Germany, thousands of autoworkers were on reduced work hours or temporary unemployment as Volkswagen and Mercedes factories were forced to halt production.

Fiat slowed production at its Brazilian factory in Betim for the second time this month.

The Stellantis factory in Rennes-La Janais in France, where 2,000 people work, was also nearly idle.

 

Essential chips 

 

Computer processors are a key element in today's vehicles, which can easily have several dozen to control elements such as the engine, automatic braking system, airbags, automatic parking system and the infotainment system. 

The main manufacturers are located in Asia, such as TSMC in Taiwan and Samsung and SK Hynix in South Korea, although there are still some factories in the United States and Europe.

The surge in demand for electronic devices during the pandemic is the main cause of today's shortage of chips.

A fire in a Japanese factory did not help and now a drought in Taiwan may force a reduction in output.

 

Automakers adapt 

 

Automakers say they are managing the situation on a day by day basis and are trying to avoid shutting down production lines completely.

Due to the chip shortage, "GM is building some vehicles without certain modules when necessary," the US carmaker said in a statement. 

"They will be completed as soon as more semiconductors become available", it added. 

Stellantis was able to resume production of the new Peugeot 308 at half the normal pace after a three-week halt. It went back to a dashboard console that uses an analogue speedometer. 

Most automakers say they hope to make up lost production during the second half of the year.

Current shortages of semiconductor chips that are slowing car production worldwide "can be compensated for by the end of the year", Daimler CEO Ola Kallenius said in a statement.

 

End of the tunnel? 

 

Others are more pessimistic.

"An improvement in the short term is not to be expected" said Volkmar Denner, the CEO of Bosch, which is a major supplier of components for automakers.

"Our entire industry will probably be confronted by this unsatisfactory situation for months to come," he added.

French auto component maker Faurecia does not expect an improvement before the very end of the year as the consumer electronics industry is gearing up for its peak manufacturing period.

"The third quarter is very important for manufacturing goods for Christmas. We can be more optimistic for the fourth quarter," said the company's CEO, Patrick Koller.

According to Iris Pang, a specialist on the Taiwanese economy at ING, the chip shortage risks lasting into next year or even 2023. The drought has prompted authorities to order firms in areas where chip factories are located to reduce water usage.

"This has started to make semiconductor factories nervous when they have more semiconductor orders," she said.

Intel tops expectations as chip demand high

By - Apr 24,2021 - Last updated at Apr 24,2021

SAN FRANCISCO — US semiconductor giant Intel on Thursday said it took in more money than expected in the first quarter amid "explosive" growth in demand for computer chips.

Intel revenue was $19.7 billion during the first three months of this year, up nearly $1 billion from the same period in 2020, according to its earnings report.

"Intel delivered strong first-quarter results driven by exceptional demand for our leadership products and outstanding execution by our team," Chief Executive Pat Gelsinger said in a release.

The results come as trends in remote work, school and socialising driven by the pandemic have revived interest in laptop and desktop computers and increased the need for data centres, all of which demand chips.

The chip industry is seeing a cycle of "explosive growth" and this year is on track to be one of the biggest ever for personal computer shipments, according to Gelsinger.

"Overall, Intel had a good quarter as it is taking advantage of the huge uptick in overall chip demand for computers," said analyst Patrick Moorhead of Moor Insights and Strategy.

"I'm very pleased to see Mobileye keep blowing away its numbers as it did last quarter."

Mobileye, an arm of Intel specialising in technology for automated driving systems in vehicles, brought in $377 million in the quarter, up 48 per cent from the same period a year earlier.

Intel shares slipped nearly 3 per cent in after-hours trades that followed release of the earnings figures, which showed it made a profit of $3.4 billion, a 41 per cent decline from the same quarter a year earlier.

While Intel remains one of the world's leading chip companies, it has lagged behind rivals in the fast-growing segment of mobile devices, and its chips are being phased out by Apple, which is developing its own microprocessors for its Mac computers.

"This is a pivotal year for Intel," said Gelsinger, fresh in his role as chief executive.

"We are setting our strategic foundation and investing to accelerate our trajectory and capitalise on the explosive growth in semiconductors that power our increasingly digital world."

Intel has unveiled plans to spend $20 billion building two new plants in Arizona as part of a plan to boost production at home and in Europe.

A global chip shortage has ramped up pressure to reduce reliance on factories in Asia.

"Governments around the world are recognising the critical nature of semiconductors and the need to increase advanced chip manufacturing capacity and prepare for the future," Gelsinger said.

He added that he was "encouraged" that US President Joe Biden recognised chip manufacturing as a critical part of national infrastructure deserving of investment.

Lebanon launches first electric car despite crisis

By - Apr 24,2021 - Last updated at Apr 24,2021

A model leans on the hood of the 'Quds Rise', the first ever electric car produced in Lebanon, during an unveiling ceremony in Khaldeh, south of the capital Beirut, on Saturday (AFP photo)

BEIRUT — A Lebanon-made electric car made its debut on Saturday, the first time the Mediterranean country has manufactured an automobile, despite struggling amid a dire economic crisis with frequent power cuts.

The red sports car with butterfly doors — named "Quds Rise", using the Arabic name of Jerusalem — is the project of Lebanese-born Palestinian businessman Jihad Mohammad.

It is the "first automobile to be made locally", Mohammad told reporters, at the unveiling in a parking lot south of Beirut.

It was built in Lebanon "from start to finish", he said of the prototype, emblazoned at the front with a golden logo of the Dome of the Rock, the shrine in Jerusalem's Al Aqsa Mosque compound, Islam's third holiest site.

The car is to cost $30,000.

Production of up to 10,000 vehicles is hoped to start later this year in Lebanon, with cars to hit the market in a year's time, said Mohammad, the director of Lebanon-based firm EV Electra.

Mohammad, 50, said he set up the company four years ago after years abroad, employing Lebanese and Palestinian engineers among 300 members of staff.

He says his long-term goal is to compete on the international market for hybrid and electric cars, as well as to make sales in Lebanon.

But the unveiling comes as Lebanon struggles amid its worst economic crisis in decades, and imported car sales are at a record low, in part due to capital controls and drastic devaluation on the black market.

Mohammad said potential Lebanese buyers would be offered the opportunity to pay for half the new electric car in dollars, with the rest paid in Lebanese pounds at an exchange rate better than the black market one, to be paid over five years without interest.

The economic crunch since late 2019 has plunged more than half the population into poverty.

Lebanon also relies on fossil fuels for power generation, already insufficient for a population of around 6 million who suffer daily power cuts.

To power its new electric cars, the firm plans to set up around 100 recharging stations across the country connected to generators.

These could then be fuelled by solar and wind power generation, Mohammed said.

German finance minister denies responsibility for Wirecard scandal

By - Apr 22,2021 - Last updated at Apr 22,2021

BERLIN — Germany's finance minister on Thursday denied responsibility for the collapse of payments firm Wirecard in a parliamentary inquiry that will also put Chancellor Angela Merkel in the hot seat.

"The government does not bear responsibility for this large-scale criminal fraud," Finance Minister Olaf Scholz told lawmakers investigating the case which he described as the "biggest accounting fraud scandal" in the history of post-war Germany.

Once a rising star in the booming fintech sector, Wirecard filed for bankruptcy last year after admitting that 1.9 billion euros ($2.3 billion) was missing from its accounts.

The company's former chief executive Markus Braun and several other top executives were arrested on fraud and money-laundering charges.

Lawmakers are investigating the political and regulatory failings that allowed the Wirecard cheating to go unnoticed for years, with critics saying early warning signs were ignored.

But asked if bore personal responsibility for the scandal, Scholz also emphatically replied: "No."

Facing the committee two days after Economy Minister Peter Altmaier, the finance minister admitted, however, that official regulators were "not prepared enough" for the scandal and pledged to "rebuild trust" in Germany as a financial centre.

The focus on politicians' roles in the drama comes at an awkward time for Merkel's ruling conservatives and their Social Democratic (SPD) coalition partners, five months before a general election.

 

Merkel in China 

 

Outgoing chancellor Merkel will be quizzed on Friday over her role in the scandal after it emerged she promoted Wirecard on a trip to China in September 2019 when the firm was eyeing a foray into the Chinese market.

Her intervention has raised eyebrows because journalists were already voicing doubts about Wirecard's books at the time.

Merkel should ask herself whether "promoting Wirecard was really appropriate or whether her office should not have looked into the warning signs earlier," said Frank Schaeffler, an MP from the pro-business FDP party who is on the committee.

Also accused of being too slow to react is Merkel's would-be successor Scholz from the centre-left SPD, whose finance ministry oversees banking regulator Bafin, which has come under fire for its lax oversight of Wirecard.

Up before lawmakers on Wednesday, state secretary Joerg Kukies had insisted that Wirecard at no point benefited from special treatment from the ministry.

Bafin has been particularly criticised for its decision to impose a two-month ban on shorting Wirecard shares in early 2019.

Bafin also controversially filed a complaint against two Financial Times journalists who reported about irregularities at Wirecard, while dismissing their suspicions.

The regulator has in recent months undergone sweeping reforms and a reshuffle at the top, including the dismissal of former chief Felix Hufeld in January.

On Thursday, Scholz said the reform of the Bafin was part of "our important task to rebuild trust in Germany as a financial centre". 

 

'Criminal behaviour' 

 

With the election battle in full swing, SPD and opposition MPs have sought to shift the spotlight onto the conservative-run economy ministry by highlighting the role of Wirecard auditors.

As Wirecard's auditor for more than 10 years, accountancy giant EY signed off on the firm's accounts even as a string of media reports raised alarm about Wirecard's accounting practices.

As they grilled Economy Minister Altmaier on Tuesday, lawmakers questioned whether the ministry's auditing watchdog APAS should have scrutinised EY's work more closely.

Any shortcomings on the part of APAS would mean "the minister had not done his work properly either," FDP deputy Florian Toncar said. 

Though he denied responsibility for the scandal, Altmaier told the committee that compliance rules at APAS would be tightened.

In a midway report in March, lawmakers on the committee denounced what they called "a culture of non-responsibility" and said that financial authorities and political leaders had "well-founded indications of criminal behaviour at Wirecard". 

 

ECB keeps pouring in cheap money as virus woes persist

By - Apr 22,2021 - Last updated at Apr 22,2021

The headquarters of the European Central Bank is pictured prior to a news conference following the meeting of the governing council of the ECB in Frankfurt am Main, western Germany, on January 23, 2020. (AFP photo)

FRANKFURT — The European Central Bank (ECB) on Thursday kept its massive pandemic-fighting stimulus package in place, in a bid to help Europe's ailing economies overcome the devastating impact of the coronavirus crisis.

After calming jittery markets last month by promising to "significantly" step up the pace of its pandemic emergency bond purchases, the ECB's governing council said such buys will keep going at the same accelerated rate.

ECB President Christine Lagarde, is likely to use her press conference to reiterate the message that there will be no premature end to "favourable financing conditions" until the crisis is deemed over and the rebound is firmly on track.

The Frankfurt institution on Thursday held interest rates at historic lows, including a deposit rate of -0.5 per cent -- meaning banks pay to store excess cash with the ECB.

The ECB's 1.85 trillion euro ($2.2 trillion) pandemic emergency bond purchasing programme (PEPP), set to run until March 2022, was also kept intact, although the council stressed it stood ready to "adjust all of its instruments, as appropriate", should it become necessary.

The goal of the ECB's measures, which also include super cheap loans for banks, is to keep borrowing costs low to encourage spending and investment in the 19-nation currency club in order to drive up growth and inflation.

Lagarde may also repeat her plea for eurozone governments to share the load through fiscal stimulus.

Those efforts were given a boost when a top German court on Wednesday threw out a legal challenge against the European Union's 750-billion-euro recovery fund, paving the way for its ratification.

Lagarde has frequently called for the landmark fund to be implemented, saying it has a "key role" to play in nursing the region back to health.

 

Looking past inflation 

 

 

The former French finance minister and ex-head of the International Monetary Fund can also expect to be quizzed about the future pace of asset purchases.

Following last month's pledge to accelerate debt purchases in response to rising bond yields, the ECB's weekly PEPP purchases have averaged 17 billion euros, compared to around 12 billion in January and February.

While investors are keen for any insight into the future rhythm of the purchases and how the ECB plans to eventually wind down the scheme, observers believe Lagarde will keep her cards close to her chest.

"Silence is golden," said ING bank economist Carsten Brzeski, adding that the next meeting on June 10 should bring more clarity, when the ECB unveils new growth and inflation forecasts.

In quarterly projections published in March, the ECB surprised observers by slightly raising its 2021 growth forecast from 3.9 to 4.0 per cent, fuelled by optimism about Europe's Covid-19 vaccine rollout and the global economic rebound.

While the speed of inoculations has picked up across the bloc in recent weeks after a bumpy start, many countries are battling the spread of more contagious virus variants, including strains first detected in Britain and South Africa.

Top eurozone economies Germany, France and Spain are among those that have extended or reimposed shutdowns and travel curbs to rein in Covid cases, weighing on second-quarter growth prospects.

"In June, the ECB and markets will have a much better idea about the severity of the current wave of infections and restrictions as well as the progress of the vaccination campaign and its impact on the economic outlook," said Schmieding.

Eurozone inflation, meanwhile, continued its upward trend and climbed to 1.3 per cent in March, powered in part by higher energy prices.

Economists see inflation bounding even higher in the months ahead, possibly exceeding the ECB's long-out-of-reach inflation target of "close to, but below" 2.0 per cent.

Lagarde, however, stressed in March that price growth is being driven by "temporary factors" linked to the pandemic, such as pent-up consumer demand as virus curbs are relaxed.

The ECB "will see through that", she said, and stick with its ultra-loose monetary policy so long as underlying inflation remains weak.

 

Chevron, Toyota announce alliance on hydrogen technology

By - Apr 22,2021 - Last updated at Apr 22,2021

Chevron and Toyota announced on Wednesday a first step towards an alliance to commercialise hydrogen, seen as an environmentally-friendly transportation fuel option. (AFP file photo)

NEW YORK — Chevron and Toyota announced on Wednesday a first step towards a strategic alliance to commercialise hydrogen, which is seen as an environmentally-friendly transportation fuel option.

The alliance, which is centered on the United States, is expected to focus on three areas: collaborating on public policy to promote hydrogen infrastructure, assessing the market for fuel cell electric vehicles and the hydrogen supply that will be needed, and exploring opportunities to jointly research and develop hydrogen powered transportation and storage.

The venture aims "to advance a functional, thriving global hydrogen economy," the companies said in a joint press release.

The memorandum of understanding announced Wednesday is non-binding, but "lays out the path to a formalised strategic alliance by early third quarter 2021," a Chevron spokesman said in an email.

At this week's Shanghai motor show, Toyota unveiled plans for its first global line-up of battery electric vehicles, including an SUV expected to reach consumers in just over a year.

Chevron has faced pressure from environmentalists to match commitments by European oil giants like Royal Dutch Shell and Total, which have set targets to reach net-zero carbon emissions.

Chevron said it has no plans to shutter its gas stations.

"Fuels have and will continue to change over time and offering hydrogen at retail sites is a continuation of that change," a Chevron spokesman said.

"Ultimately, consumer preferences help drive the offerings at Chevron-branded retail fuel stations; however, we anticipate that gasoline and diesel will continue to be important offerings that consumers will require. We are committed to the Chevron and Texaco brands, and reliably supplying gasoline and other fuels to our loyal customer base."

At its annual meeting in May, Chevron is expected to battle against a number of shareholder proposals that require specific actions on climate change as well as a measure requiring more disclosure about the company's lobbying activities.

 

 

 

European stocks resist drops in NY, Asia

By - Apr 21,2021 - Last updated at Apr 21,2021

LONDON — European stocks mostly rose on Wednesday despite losses in Asia and on Wall Street, and the collapse of the Super League football project comprising a dozen of the world's richest clubs, dealers said.

London stocks recovered 0.1 per cent one day after slumping 2 per cent in a Europe-wide selloff on intensifying pandemic concerns.

In the eurozone on Wednesday, Paris stocks added 0.3 per cent but Frankfurt shed 0.4 per cent.

"European markets are in recovery mode today, with stocks turning upward to regain lost ground after sharp declines yesterday," said analyst Joshua Mahony at trading firm IG.

"Markets are caught between optimism over vaccination progress at home, and the fact that global efforts to combat the pandemic remain reliant upon economic restrictions until vaccines are widespread."

On Wall Street, stock indices opened lower, adding to losses on Monday and Tuesday, with the Dow dipping less than 0.1 per cent as trading got underway.

"It's just kind of a blah morning, as buyers continue to lack vigor despite more good earnings news in general and a 10-year [US Treasury] note yield that continues to track favourably for stocks," said Patrick J. O'Hare at Briefing.com.

He said it was normal for stocks to pull back after the gains racked up in recent months.

"What it also typically does in the wake of selling after big runs is buy on the weakness, fortified in such pursuits by the persistence of low interest rates and tons of impatient cash looking for higher-yielding returns" but this hasn't yet happened, he added.

Asia faced big falls on fears over a renewed coronavirus surge.

Countries around the world are urgently working to accelerate vaccination campaigns and revive their pandemic-ravaged economies, with new variants of the pathogen driving unprecedented infection numbers in some of the worst-hit nations. 

Tokyo led the sell-off with the Nikkei down 2 per cent by the close after the port city of Osaka — where hospital beds for seriously ill coronavirus patients have run out — asked the central government to impose a state of emergency.

Infections there are rising just three months before the country hosts the virus-delayed Olympics, and Tokyo and several other areas are expected to follow in Osaka's footsteps.

Mumbai fell another 0.5 per cent on Wednesday as India battles a worrying virus surge and record daily case numbers overwhelm already stretched hospitals.

The capital New Delhi was locked down on Monday for a week, and the government said all adults would be eligible for a vaccine from May as it tries to get a grip on the crisis.

 

Airlines could lose $47.7b in 2021 — IATA

By - Apr 21,2021 - Last updated at Apr 21,2021

PARIS — Airlines are forecast to lose $47.7 billion (39.7 billion euros) this year, worse than previously forecast, a global industry group said on Wednesday as the sector struggles to recover from the coronavirus pandemic.

On a brighter note, the International Air Transport Association (IATA) slightly raised its forecast for global air passenger traffic, saying it would reach 43 per cent of pre-pandemic levels.

The IATA had forecast net post tax losses of $38 billion in December.

"Financial performance will be worse and more varied this year than we expected in our December forecast, because of difficulties in controlling the virus variants and slower vaccination in some regions," the association said in a report.

Airlines lost more than $126 billion last year as the COVID-19 crisis prompted countries to lock down cities, close borders and ban international flights.

North American airlines will fare better than previously thought, with losses of $5 billion instead of $11 billion, thanks to the recovery of the domestic market there, the IATA said.

But the outlook has worsened in Europe due to a slower vaccination campaign and less easing of international travel restrictions.

European airlines are now tipped to lose $22 billion, compared to $12 billion in the earlier forecast.

Bicycles create a headache in urban cities

By - Apr 21,2021 - Last updated at Apr 21,2021

This aerial photo taken on Tuesday shows abandoned public shared bicycles at a lot in Shenyang in China's north-eastern Liaoning province (AFP photo)

BEIJING — Handlebars tight in snaking rows of colour, thousands of abandoned bicycles line an open field outside the city of Shenyang, relics of a shared bike mania that has overwhelmed China's cities.

The turquoise, blue and yellow bicycles, arranged in long lines, some piled on top of each other, bear the logos of the companies that dominate China's bike-sharing sector — Hellobike, Didi and Meituan.

Low cost-shared bikes, which users can unlock using apps and park virtually anywhere, burst onto Chinese streets in the middle of the last decade with investors rushing to fund bike startups like the now-defunct Ofo and Mobike.

But the two-wheelers soon took over pavements and spilled over into bike lanes and streets, parked haphazardly by users who sometimes simply tossed the bikes into shrubbery, creating a headache for urban authorities and pedestrians.

Many bikes suffered damage or were stolen, while some were even repurposed into makeshift barricades when COVID-19 broke out last year.

The problem is a familiar one to cities around the world battling to round up stray bikes, from metro stations in Washington DC to the bottom of Melbourne's river.

Aerial photographs from the suburbs of Shenyang, Liaoning province, show a bicycle graveyard, one of many which began appearing as early as 2018 as tech start-up darling Ofo imploded, defaulting on debts as its users claimed back rental deposits.

Mountains of damaged bikes belonging to other companies have also been discarded rather than repaired, in contrast to the "green" image usually associated with urban cycling.

The bikes now jostle for space on Chinese streets with hordes of shared electronic scooters, which have also made their appearance elsewhere in the world including Paris and California.

Chinese cities have vowed to curb the chaotic fleets of bikes, with Beijing saying it will remove 44,000 bikes from the city centre this year in order to cap bike numbers at under 800,000, according to state media.

Erdogan wades into row over Turkish bank reserves

By - Apr 21,2021 - Last updated at Apr 21,2021

ANKARA — Turkish President Recep Tayyip Erdogan on Wednesday publically defended himself for the first time against charges that he oversaw the illegal depletion of the country's central bank reserves.

Opposition parties have turned "Where is the $128 billion?" into a political slogan after the central bank used vast sums to try and support the lira while it fell to historic lows against the dollar and euro in the past two years.

Economists say the purchases fell within the Turkish government's remit but were not fully transparent because they did not appear clearly on the central bank's and the finance ministry's balance sheets.

Analysts say the use of select state banks in the purchases further clouded the picture and helped raise suspicions from the opposition of impropriety or collusion.

"This money was not gifted to anyone or wasted," Erdogan told members of his ruling parliamentary party.

"It simply changed hands and went to economic actors... and a large part of it has returned to the central bank," he said in televised remarks.

The Turkish lira lost 0.7 per cent against the dollar during Erdogan's speech.

Turkey's financial problems stem in part from Erdogan's unconventional belief that higher interest rates cause inflation instead of slowing it down.

He urged the central bank in 2019-2020 to keep the rate low to help promote public lending and economic growth.

But inflation kept rising and Turks converted their liras into foreign currencies and gold to preserve their savings.

The central bank stemmed the lira's losses after raising its key interest rate above the annual rate of inflation — last reported at 16.2 per cent — late last year.

Erdogan also approved his controversial but powerful son-in-law Berat Albayrak's departure from the finance ministry last November.

Albayrak was widely credited with pushing the policy of using central bank reserves to support the lira while keeping interest rates low.

Finance Minister Lutfi Elvan said on Monday that he wanted the central bank to now publish more data about how it used its reserves to support the lira.

He also flatly rejected charges of corruption.

"You may discuss the methods, but you cannot accuse anyone of corruption," Elvan said.

 

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